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EXHIBIT
10.1
ASSET PURCHASE AGREEMENT
by and among
PAR PHARMACEUTICAL, INC.
QOL MEDICAL, LLC
and, solely with respect to certain
provisions,
THE MEMBERS OF QOL
dated as of March 31, 2009
NY663381v.16
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TABLE OF
CONTENTS
Page
1.
Purchase and Sale of Assets
1
1.1
Purchase and Sale of Assets.
1
1.2
Grant of License.
1
1.3
Grant of Sublicense.
2
1.4
Retention of Excluded Assets; Certain
Documentation.
2
2.
Assumption of Liabilities
2
2.1
Assumption of Assumed
Liabilities.
2
2.2
Excluded Liabilities.
2
3.
Purchase Price and Payment.
2
3.1
Purchase Price.
2
3.2
Allocation of Purchase Price.
3
3.3
Payment of Sales, Use and Other
Taxes.
3
4.
Closing
3
4.1
Time and Place.
3
4.2
Deliveries at Closing.
4
5.
Representations and Warranties of
Seller.
4
5.1
Organization, Etc.
4
5.2
Authority of Seller.
5
5.3
Consents and Approvals.
5
5.4
Non-Contravention.
5
5.5
Litigation; Compliance with Applicable
Laws.
6
5.6
Financial Information.
6
5.7
Contracts.
6
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5.8
Title to Acquired Assets.
7
5.9
Regulatory Issues.
8
5.10
Product Intellectual Property.
8
5.11
Tax Matters.
9
5.12
No Material Adverse Effect.
10
5.13
Brokers.
10
5.14
Disclaimer of Other Representations and
Warranties.
10
6.
Representations and Warranties of
Buyer.
10
6.1
Corporate Organization.
10
6.2
Authority of Buyer.
10
6.3
Consents and Approvals.
11
6.4
Non-Contravention.
11
6.5
Brokers.
11
7.
Covenants of the Parties
11
7.1
Conduct of the Business.
11
7.2
Continued Due Diligence.
12
7.3
Notices of Certain Events; Continuing
Disclosure.
12
7.4
Exclusive Dealings.
13
7.5
Reasonable Best Efforts.
13
7.6
Cooperation and Transition.
13
7.7
Public Announcements.
14
7.8
Bulk Sales.
14
7.9
NDC Numbers; Marketing
Materials.
14
7.10
Regulatory Matters.
15
7.11
Post-Closing Orders and
Payments.
16
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7.12
Rebates; Government Price Reporting
Obligations.
16
7.13
Insurance.
16
7.14
Sales Tax Certificate.
17
7.15
Further Assurances.
17
7.16
Product Returns.
17
7.17
Cooperation relating to Non-Indemnifiable
Claims.
18
7.18
Release of Liens of Company
Creditors.
18
8.
Conditions to the Obligations of
Seller.
18
8.1
Agreements and Conditions.
18
8.2
Representations and
Warranties.
18
8.3
No Legal Proceedings.
18
8.4
Officer’s Certificate.
19
8.5
Secretary’s Certificate.
19
8.6
Purchase Price.
19
8.7
Ancillary Agreements.
19
8.8
Sales Tax Certificate.
19
9.
Conditions to the Obligations of
Buyer.
19
9.1
Agreements and Conditions.
19
9.2
Representations and
Warranties.
19
9.3
No Legal Proceedings.
19
9.4
Officer’s Certificate.
20
9.5
Secretary’s Certificate.
20
9.6
Ancillary Agreements.
20
9.7
Certificates of Status.
20
9.8
Consents.
20
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9.9
Liens.
20
9.10
Restrictive Contracts.
20
9.11
Standstill Agreement.
20
9.12
Consummation of MDRNA
Transaction.
20
9.13
Authorization Letters from DMF
Holders.
20
9.14
Wholesaler Inventories.
21
9.15
Returns Report.
21
10.
Indemnification.
21
10.1
Termination of Representations and
Warranties.
21
10.2
Indemnification Obligations of
Seller.
21
10.3
Indemnification Obligations of
Buyer.
21
10.4
Procedures for Indemnification;
Defense.
22
10.5
Limitations.
23
11.
Termination and Abandonment.
24
11.1
Methods of Termination.
24
11.2
Procedure upon and Effect of
Termination.
24
12.
Non-Competition;
Confidentiality.
24
12.1
Non-Competition.
24
12.2
No-Competing Interests.
25
12.3
Non-Disruption.
25
12.4
Confidentiality.
25
12.5
Remedies for Breach.
25
13.
Miscellaneous
25
13.1
Notices.
25
13.2
Entire Agreement.
27
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13.3
Waiver.
27
13.4
Amendment.
27
13.5
Third Party Beneficiaries.
27
13.6
Assignment; Binding Effect.
27
13.7
Headings.
28
13.8
Severability.
28
13.9
Governing Law.
28
13.10
Consent to Jurisdiction and Forum
Selection.
28
13.11
Expenses.
28
13.12
Counterparts.
28
14.
Definitions.
28
14.1
Defined Terms.
28
14.2
Construction of Certain Terms and
Phrases.
38
14.3
Disclosure Schedules.
38
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ANNEXES
Annex 1 – Non-Competition
Provisions
Annex 2 – Certain Provisions
Applicable to QOL Members
EXHIBITS
Exhibit A – Form of Seller Letter
to FDA
Exhibit B – Form of Buyer Letter to
FDA
Exhibit C – Form of Assignment and
Assumption Agreement
Exhibit D – Form of Escrow
Agreement
Exhibit E – Form of Patent
Assignment
Exhibit F – Form of Trademark
Assignment
SCHEDULES
|
|
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Schedule 1.3
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Sublicense
|
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Schedule 5.3(a)
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Seller Governmental Consents
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Schedule 5.3(b)
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Seller Third Party Consents
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Schedule 5.4
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Non-Contravention
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Schedule 5.5(a)
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Litigation
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Schedule 5.6
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Financial Information
|
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Schedule 5.7(b)(i)
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Restrictive Contracts
|
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Schedule 5.7(b)(ii)
|
Assumed Contracts
|
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Schedule 5.8
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Liens
|
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Schedule 5.9(b)
|
Regulatory Issues
|
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Schedule 5.9(c)
|
Improvements to Manufacturing Process
|
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Schedule 5.10(c)
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Trademarks
|
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Schedule 5.10(d)
|
Annuities, Maintenance Fees and Renewals
|
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Schedule 6.3
|
Buyer Governmental Consents
|
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Schedule 7.6(c)(i)
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Restrictive Contracts to Amend or Terminated Before Closing
|
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Schedule 7.6(c)(ii)
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Restrictive Contracts to Amend or Terminated After Closing
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Schedule 9.9
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Liens, Etc. to be Released at Closing
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Schedule 14.1(a)
|
Inventory
|
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Schedule 14.1(b)
|
Certain Product Intellectual Property
|
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ASSET PURCHASE
AGREEMENT
This Asset Purchase Agreement (this
“ Agreement ”) is made and entered into as of
March 31, 2009, by and among Par Pharmaceutical, Inc., a Delaware
corporation (“ Buyer ”), QOL Medical, LLC, a
Delaware limited liability company (“ Seller ”),
and the members of Seller who are signatories to this Agreement
(each, a “ QOL Member ”), it being understood
that Trevor Blake and Edwin Hernandez have entered into this
Agreement only with respect to Annex 1 and Annex 2
and the other QOL Members have entered into this Agreement only
with respect to Annex 2 . Buyer, Seller and the QOL Members
are sometimes referred to in this Agreement individually as a
“ Party ” and collectively as the “
Parties ”.
RECITALS
WHEREAS, Seller is the holder of certain
Regulatory Approvals relating to Nascobal™ (cyanocobalamin,
USP), both nasal spray and gel forms (as further defined herein,
the “ Product ”); and
WHEREAS, Seller desires to sell the
Regulatory Approvals and certain related assets and rights related
to the Product to Buyer, and Buyer desires to purchase the
such assets and rights from Seller.
AGREEMENT
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and promises contained herein,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties,
intending to be legally bound, agree as follows:
1.
Purchase and Sale of
Assets
1.1
Purchase
and Sale of Assets.
Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall sell,
transfer, convey, assign and deliver, or cause to be sold,
transferred, conveyed, assigned and delivered, to Buyer, and Buyer
shall purchase, acquire and accept from Seller, all of
Seller’s right, title and interest in and to the Acquired
Assets for the consideration set forth in Section 3. At and
subsequent to the Closing, the Seller shall perform all obligations
required of Seller under this Agreement.
1.2
Grant of
License.
(a)
Effective upon the Closing, Seller hereby
grants to Buyer and its Affiliates a royalty-free, fully paid-up,
perpetual, exclusive, transferable (only to a transferee of
ownership of the Product), sub-licensable, world-wide and
irrevocable license to use in connection with the making, having
made, selling, having sold, using, and importing the
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Product and any component thereof, any
and all intellectual property rights currently existing as of the
Closing and owned by Seller to the extent not included in Product
Intellectual Property (including tooling and equipment
specifications) that are necessary for Buyer’s making, having
made, selling, having sold, using and importing of the Product and
any component thereof as it is being done currently or currently
contemplated by or on behalf of Seller (the “ Other IP
”). The Parties hereby acknowledge and agree that (i)
no license rights, other than those explicitly granted by Seller
under this Section 1.2(a), are implicitly granted to Buyer with
respect to the Other IP, and (ii) Seller expressly reserves all of
its other rights with respect to the Other IP.
(b)
Subject to license granted in Section
1.2(a), all Other IP and the confidential information therein are
and will remain the exclusive property or rights of the Seller,
whether or not specifically recognized or perfected under the laws
of the jurisdiction in which the Product is being made, sold, used
or imported. Buyer shall treat the confidential information
embodied therein in the same manner it treats it own confidential
information.
1.3
Grant of
Sublicense.
Effective upon the Closing,
Seller hereby grants a sublicense to Buyer and its Affiliates on
terms and conditions set forth on Schedule 1.3 .
1.4
Retention
of Excluded Assets; Certain Documentation.
From and after the Closing,
Seller shall retain all of its right, title and interest in and to
the Excluded Assets and Seller may retain, for legal and regulatory
purposes only, an archival copy of all Assumed Contracts, Books and
Records, Marketing Materials and other documents or materials
conveyed hereunder.
2.
Assumption of
Liabilities
2.1
Assumption
of Assumed Liabilities.
Subject to the terms and
conditions of this Agreement, as of the Closing Date, Buyer agrees
to assume, satisfy, perform, pay and discharge the Assumed
Liabilities.
2.2
Excluded
Liabilities.
Seller shall retain and
remain solely responsible for, and shall satisfy, perform, pay and
discharge when due, any and all Excluded Liabilities.
3.
Purchase Price and
Payment.
3.1
Purchase
Price.
(a)
Purchase Price . Buyer shall pay Fifty-Four Million Five
Hundred Thousand Dollars ($54,500,000.00), subject to adjustment as
set forth herein (the “ Purchase Price ”) and
assume the Assumed Liabilities at Closing.
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(b)
Payments of Purchase Price
. At the Closing, Buyer shall make
the following payments:
(i)
the Final Payoff Amount to the Company
Creditors in accordance with the Payoff Letter;
(ii)
Two Million Dollars ($2,000,000.00) (the
“ Escrow Amount ”) deposited by Buyer in an
escrow account designated by the Escrow Agent (the “
Escrow Account ”) to be held in and disbursed from the
Escrow Account in accordance with the terms of the Escrow
Agreement, which amount shall be subject to reduction for indemnity
claims in accordance with Section 10.2 and the Escrow Agreement;
and
(iii)
Fifty-Two Million, Five Hundred Thousand
Dollars ($52,500,000.00) minus the Final Payoff Amount, to
Seller.
(c)
Escrow Release Date.
On the date one day after the date
that is twenty-four (24) months following the Closing Date (such
date, the “ Escrow Release Date ”), the Escrow
Agent shall disburse to the Seller the amounts remaining in the
Escrow Account, including any interest earned on the Escrow Amount,
subject to any claim notice pursuant to Section 10.4 delivered to
the Seller prior to 5:00 P.M. Eastern Standard Time on the Escrow
Release Date (and any subsequent resolution of any disputes as
provided in Section 10).
(d)
Payment of Funds
. All payments due to Seller
pursuant to this Section 3.1 shall be paid by wire transfer of
immediately available funds to accounts designated in writing by
Seller at least two (2) Business Days prior to the Closing
Date.
3.2
Allocation
of Purchase Price.
Within sixty (60) days after
the Closing Date, Seller and Buyer shall agree in good faith on an
allocation of the Purchase Price and all other capitalized costs
among the Acquired Assets in accordance Section 1060 of the Code
and the Treasury Regulations thereunder (and any state, local or
foreign law, as applicable) (the “ Tax Allocation
”); provided , that Buyer and Seller agree that the
Inventory and the non-compete provisions contained herein shall be
valued at no more than $2,000,000 in the aggregate. Each of
the Parties agrees to report (and to cause its Affiliates to
report) the transactions contemplated by this Agreement in a manner
consistent with Section 1060 of the Code and the Treasury
Regulations thereunder (and any state, local or foreign law, as
applicable) and with the terms of this Agreement, including the Tax
Allocation, and agrees not to take any position inconsistent
therewith in any Tax Return (including IRS Form 8594), in any Tax
refund claim, in any litigation or otherwise.
3.3
Payment
of Sales, Use and Other Taxes.
Seller shall be solely
responsible for all sales, use, transfer, value added, gross
receipts and other similar Taxes, if any, arising out of the sale
by Seller of the Acquired Assets to Buyer pursuant to this
Agreement, except for any recording fees due at the time of
recording the assignments of any of the Acquired Assets.
Seller, as required by applicable Law, shall timely file or
cause to be filed all necessary documents with respect to Taxes
that are the Seller’s
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obligation. Buyer shall be
responsible for all recording fees due in connection with recording
the assignment of any of the Acquired Assets from Seller to Buyer.
In addition, all personal property, ad valorem or other
similar Taxes (other than and excluding income Taxes) levied with
respect to the Acquired Assets for a taxable period which includes
(but does not end on) the Closing Date shall be apportioned between
Buyer and Seller based on the number of days included in such
period through (and which includes) the Closing Date and the number
of days included in such period after the Closing Date, and Buyer
and Seller shall cooperate fully, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax
Returns with respect to Taxes addressed in this Section
3.3.
4.
Closing
4.1
Time and
Place.
The closing of the sale and
transfer of the Acquired Assets, to be effective at 12:01 A.M.
Eastern Standard Time on the Closing Date (the “
Closing ”), will take place at the offices of
Buyer’s special counsel, K&L Gates LLP, located at 599
Lexington Avenue, New York, NY 10022, or at another place
designated by Buyer, on the second (2 nd ) Business Day
following the date on which all of the conditions to each
Party’s obligations under Sections 8 and 9 have been
satisfied or (if permitted) waived, or at such other time, date
and/or place as mutually agreed to by the Parties hereto (such date
of the Closing being hereinafter referred to as the “
Closing Date ”).
4.2
Deliveries
at Closing.
(a)
Closing Deliveries by
Seller . At the Closing,
Seller shall deliver or cause to be delivered: (i) immediately
following the Closing to the FDA, a letter duly executed by Seller
notifying the FDA of transfer of Seller’s rights to the
Regulatory Approvals to Buyer, the form of which is attached hereto
as Exhibit A ; (ii) to Buyer, (A) physical possession of the
Inventory by means of instruction to the third party in possession
of the Inventory to ship the Inventory to the location designated
by Buyer; (B) an electronic copy of the Seller NDA’s; (C) the
Assumed Contracts; (D) the Assignment and Assumption Agreement and
other instruments of assignment, conveyance and transfer as are
necessary to effect and confirm the sale, transfer, conveyance, and
assignment of the Acquired Assets and the assumption of the Assumed
Liabilities, and the other Ancillary Agreements, each duly executed
by Seller; and (E) correct and complete reports as set forth in
Sections 9.14 and 9.15. On or before the Closing Date, Seller
shall commence shipment, to be received by Buyer no later than
seven (7) Business Days after the Closing Date, of the Regulatory
Approvals, Marketing Materials and the Books and Records to the
location selected by Buyer.
(b)
Closing Deliveries by Buyer
. At the Closing, Buyer shall
deliver or cause to be delivered to Seller, the Assignment and
Assumption Agreement and other instruments of assignment,
conveyance and transfer as are necessary to effect and confirm the
sale, transfer, conveyance, and assignment of the Acquired Assets
and the assumption of the Assumed Liabilities, and the other
Ancillary Agreements to which the Buyer will become party, each
duly executed by Buyer. Upon receipt of the Seller NDAs in
hardcopy form from Seller,
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Buyer shall deliver to the FDA a letter
duly executed by Buyer notifying the FDA of the assumption by Buyer
of the Regulatory Approvals, the form of which is attached hereto
as Exhibit B .
5.
Representations and Warranties of
Seller.
Seller represents and
warrants to Buyer as of the date of this Agreement and as of the
Closing Date, subject to such exceptions as are specifically
disclosed in the Disclosure Schedules supplied by Seller to Buyer
and dated as of the date of this Agreement, as follows:
5.1
Organization,
Etc.
Seller is a limited liability
company duly organized, validly existing and in good standing under
the laws of Delaware and has all requisite power and authority to
own its assets and carry on its business as currently conducted by
it. Seller has full limited liability company power and
authority to conduct its business and is duly qualified and in good
standing in each jurisdiction where such qualification is required,
except for any jurisdiction where failure to be so qualified and/or
in good standing would not reasonably be expected to materially
impair or delay Seller’s ability to perform its obligations
hereunder.
5.2
Authority
of Seller.
Seller has all necessary
entity power and authority to enter into this Agreement and the
Ancillary Agreements to which it shall become a party and to carry
out the transactions contemplated hereby and thereby. The
execution, delivery and performance by Seller of its obligations
under this Agreement and the Ancillary Agreements to which it shall
become a party have been duly and validly authorized and no
additional limited liability company or member authorization or
consent is required in connection with the execution, delivery and
performance by Seller of this Agreement or the Ancillary Agreements
to which it shall become a party. This Agreement and the
Ancillary Agreements to which it shall become a party have been (or
will be) duly and validly executed and delivered by Seller and,
when executed and delivered by the QOL Members and the Buyer, will
constitute a legal, valid and binding obligation of Seller
enforceable against it in accordance with its terms except (a) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors rights generally, and (b) as limited by
general principles of equity.
5.3
Consents
and Approvals.
(a)
Except as set forth on Schedule
5.3(a) , no consents, waivers, approvals, Orders or
authorizations of, or registrations, declarations or filings with,
any Governmental or Regulatory Authority (“ Seller
Governmental Consents ”) are required by or with respect
to Seller in connection with the execution and delivery by Seller
of this Agreement or the Ancillary Agreements to which it shall
become a party or the performance of its obligations hereunder or
thereunder.
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(b)
Except as set forth on Schedule
5.3(b) , no consents, waivers, approvals, or authorizations of,
or notices to, any third party (other than a Governmental or
Regulatory Authority) (“ Seller Third Party Consents
”, and together with Seller Governmental Consents, the
“ Seller Consents ”) are required by or with
respect to Seller in connection with the execution and delivery by
Seller of this Agreement or the Ancillary Agreements to which it
shall become a party or the performance of its obligations
hereunder or thereunder.
5.4
Non-Contravention.
Except as set forth on
Schedule 5.4 , the execution and delivery by Seller of this
Agreement and the Ancillary Agreements to which it shall become a
party does not, and the performance by Seller of its obligations
hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby will not:
(a)
conflict with or violate any provisions
of the organizational documents of Seller;
(b)
assuming the receipt of the Seller
Consents, conflict with or result in a violation or breach of any
term or provision of any Law applicable to Seller or the Acquired
Assets; or
(c)
assuming the receipt of the Seller
Consents, conflict with or result in a breach or default (or an
event that, with notice or lapse of time or both, would constitute
a breach or default) under, or termination of, any Assumed
Contract.
5.5
Litigation;
Compliance with Applicable Laws.
(a)
Except as set forth on Schedule
5.5(a) , there is no claim, action, suit, investigation or
proceeding pending against (or to the Knowledge of Seller any basis
therefor), or to the Knowledge of Seller, threatened against or
affecting, any Acquired Asset, or the transactions contemplated
hereby before any court or arbitrator or any governmental body,
agency, official or authority.
(b)
Except as set forth on Schedule
5.5(b) , (i) Seller has not received any notice from any other
Person challenging its ownership of or right to use any Product
Intellectual Property and (ii) there has not been any, and there
are no, product liability suits, claims, actions, proceedings or,
to the Knowledge of Seller, investigations pending or, to the
Knowledge of Seller, threatened against Seller, relating to the
Product.
(c)
Except as set forth on Schedule 5.5(c)
, Seller is and has been in compliance in all material
respects with all Laws applicable to the Acquired Assets (excluding
the Legacy IP). The foregoing shall not apply to matters
concerning infringement or misappropriation of intellectual
property rights, which are the subject of Section 5.10.
5.6
Financial
Information.
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Schedule 5.6 sets
forth for the unaudited 2008 calendar year and the unaudited two
(2) - month period ending on February 28, 2009,
Seller’s gross sales of the Product and related Rebates (by
category) and returns received and reserved for, all of which,
except as noted on Schedule 5.6 , were prepared in
accordance with United States generally accepted accounting
principles (“ GAAP ”), applied on a basis
consistent with Seller’s past practices, subject to routine
year-end adjustments (such as routine cutoff adjustments) and
provided , that Rebates are estimated by period (as the
actual amounts are not known until some time after the ends of the
respective periods) in accordance with GAAP applied on a basis
consistent with Seller’s past practices. Also included
on Schedule 5.6 are monthly reports generated by
Seller’s service provider, Integrated Commercialization
Solutions, Inc. (“ ICS ”), which reports reflect
correct and complete Product returns data (detailing number of
units and dollar amounts) for October 2008 through February 2009;
provided , that inaccuracies in such reports that in the
aggregate amount to less than $10,000 shall not constitute a breach
of this representation and warranty.
5.7
Contracts.
(a)
For purposes of this Agreement, “
Restrictive Contract ” means the following, other than
Assumed Contracts:
(i)
any material customer, client, licensing
or supply Contract related to any of the Acquired
Assets;
(ii)
any Contract containing any covenant or
provision that materially limits, curtails or restricts the ability
of Seller to make use of or transfer any Acquired
Assets;
(iii)
any non-competition agreement or any
other agreement or obligation that limits or purports to limit in
any respect the manner in which, or the geographic areas in which,
the Product may be developed, manufactured or sold;
(iv)
any partnership, joint venture or
strategic alliance (or any contract substantially similar to any of
the foregoing) to which any Acquired Asset is
subject;
(v)
any Contract pursuant to which any third
party has any material right with respect to any Acquired Asset or
the Product; or
(vi)
any commitment or agreement to enter into
any of the foregoing.
(b)
Schedule 5.7(b)(i)
sets forth a correct and complete list of
the Restrictive Contracts and Schedule 5.7(b)(ii) sets forth
a correct and complete list of Assumed Contracts. Seller has
heretofore delivered or made available (via Seller’s online
data room) to Buyer a correct and complete copy of each contract
required to be listed on Schedule 5.7(b)(i) and Schedule
5.7(b)(ii) , together with any and all amendments and
supplements thereto.
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(c)
Each of the Assumed Contracts is valid,
binding and in full force and effect and is enforceable in all
respects in accordance with its terms by Seller, except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as
limited by general principles of equity. Except as set forth
on Schedule 5.3(a) or Schedule 5.3(b) , no approval,
consent or waiver of any Person is needed in order that any Assumed
Contract continue in full force and effect following the
consummation of the transactions contemplated by this Agreement.
Seller is not in material default under any Assumed Contract,
nor does any condition exist that, with notice or lapse of time or
both, would constitute a material default thereunder by Seller.
To the Knowledge of Seller, no other party to any Assumed
Contract is in material default thereunder, nor does any condition
exist that with notice or lapse of time, or both, would constitute
a material default by any such other party thereunder. Seller
has not received any notice of breach or default with respect to
any Assumed Contract, which breach has not been cured, or granted
to any third party any rights, adverse or otherwise, that would
constitute a material breach of any Assumed Contract, and Seller
has not received any notice of termination or cancellation under
any Assumed Contract.
5.8
Title to
Acquired Assets.
Subject to the disclosures
provided in Schedule 5.8 , Seller has good and marketable
title to, or a valid, enforceable and transferable interest in, the
Acquired Assets (except that with respect to Product Intellectual
Property other than the Patents and Trademarks, Seller has a valid
and enforceable right to use such Product Intellectual Property),
free and clear of all mortgages, security interests, charges,
encumbrances, liens, assessments, title defects, pledges, licenses
and encroachments (“ Liens ”); provided ,
that the representations and warranties in this Section 5.8 shall
not apply to Legacy IP that Seller has not used in connection with
the Product. The foregoing representations shall not apply to
matters concerning infringement or misappropriation of intellectual
property rights, which are the subject of Section 5.10.
5.9
Regulatory
Issues.
(a)
Since October 17, 2005, Seller has filed
or caused to be filed all notices and reports required by a
Governmental or Regulatory Authority in connection with the
Regulatory Approvals (other than those not yet due), including any
such annual reports filed in accordance with FDA regulations;
provided , that the foregoing representation and warranty
shall not be interpreted as a representation and warranty that
Seller’s raw material suppliers have filed all notices and
reports required to be made by such suppliers. Since October
17, 2005, Seller has not received: (i) any FDA Form
483’s relating to the Product; (ii) any FDA Notices of
Adverse Findings relating to the Product; or (iii) any warning
letters from the FDA concerning the Product. Since October
17, 2005, the Product has not been the subject of a product recall,
market withdrawal or replacement required by any Governmental or
Regulatory Authority or initiated by the Seller (other than routine
replacements or refunds with respect to expired product and the
voluntary discontinuation of sales of Nascobal Gel in
2006).
(b)
Schedule 5.9(b)
sets forth a true and complete list of
all (i) adverse drug experiences, (ii) material events and matters
concerning or affecting safety of the
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Product brought to the attention of
Seller and (iii) complaints brought to the attention of Seller with
respect to the Product, whether related to safety, manufacturing,
stability or otherwise, in each case, since October 17, 2005.
(c)
Except as set forth on Schedule
5.9(c) , Seller has not, during the twelve (12)-month period
prior to the date hereof, designed, and, to the Knowledge of
Seller, has no immediate intention of designing, any material
improvements to the manufacturing process related to the
Product.
(d)
Since October 17, 2005, Seller has
complied with all obligations arising from or related to any
commitments to or requirements of any Governmental or Regulatory
Authority pursuant to any agreement entered into between Seller and
such Governmental or Regulatory Authority and involving the
Product.
5.10
Product
Intellectual Property.
(a)
Other than as alleged in connection with
the Litigation Matter, to the Knowledge of Seller, no third party
is infringing the Patents or Trademarks or misappropriating the
trade secrets within the Product Intellectual Property (excluding
the Legacy IP).
(b)
Seller’s development, manufacture
and sale of the Product and its use of the Product Intellectual
Property in connection therewith within the United States and
South Korea as of the date hereof and as of the Closing Date has
not and does not infringe, nor is such development, manufacture or
sale of the Product or use of the Product Intellectual Property as
of the date hereof and as of the Closing Date the result of any
misappropriation of, any intellectual property rights of any other
Person. Except as disclosed on Schedule 5.10(b) ,
there have been no claims asserted against Seller alleging that
Seller’s development, manufacture or sale of the Product or
Seller’s use of the Product Intellectual Property in such
countries infringes or is the result of any misappropriation of any
intellectual property rights of any other Person.
(c)
Schedule 5.10(c)
sets forth a correct and complete list of
all Trademarks (including registration numbers and jurisdictions of
registrations), domain names and a scanned copy of the Trade Dress
used in the marketing of the Product, other than “QOL”
and any derivation thereof.
(d)
Since October 17, 2005 with respect to
the Trademarks and since June 12, 2007 with respect to the Patents,
(i) Seller has paid all annuities and maintenance fees and filed
all renewals due as of the date hereof and Schedule 5.10(d)
sets forth such annuities, maintenance fees and renewals due before
May 31, 2009 in respect of the issued Patents and the Trademarks,
and (ii) except as set forth on Schedule 5.10(d) , in no
instance has the eligibility of any issued Patent or Trademark, or
any application that has been filed by Seller with respect to any
Patent or Trademark, for protection under applicable Law been
forfeited to the public domain by omission of any required notice
or any other action or inaction of Seller.
5.11
Tax
Matters.
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(a)
Seller has filed or caused to be filed on
a timely basis all Tax Returns that it was required to file.
All such Tax Returns are true, correct and complete in all
material respects. All Taxes relating to the Acquired Assets
that are due and payable have been timely paid in full. There
is no Tax deficiency that could result in any lien on the Product
or any of the Acquired Assets or in a claim against Buyer as
transferee or owner of the Acquired Assets. There are no
“bulk sales” provisions relating to Taxes that Buyer or
Seller must comply with that could result in a Lien on the Acquired
Assets or could result in the imposition of a Tax liability on
Buyer. Seller has collected and remitted (or shall remit) all
sales and use Taxes as required by Law in each local jurisdiction
in which it does business.
(b)
Seller has not waived (and is not subject
to a waiver of) any statute of limitations in respect of the
payment or assessment of Taxes and has not agreed to any extension
of time with respect to any Tax assessment or deficiency (other
than with respect to limitation periods that have since
expired).
(c)
Seller is not a party to any agreement
extending the time within which to file any Tax Return. There
is no dispute or claim concerning any Tax Liability of Seller
relating to any Acquired Asset either (i) claimed or raised by any
taxing authority or (ii) otherwise known to Seller. No claim
has been made by a jurisdiction in which Seller does not file Tax
Returns that Seller is or may be subject to Tax relating to any
Acquired Asset by that jurisdiction and no taxing authority in such
a jurisdiction has made any inquiry regarding such
matters.
(d)
Seller is not obligated in connection
with the Acquired Assets to pay the Taxes of another person by
contract, as transferee, as successor, or otherwise.
(e)
Seller is not a “retailer” in
accordance with the Laws of Kentucky, and Buyer will not be subject
to successor liability for any Tax resulting from the purchase of
the Acquired Assets located in Kentucky.
5.12
No
Material Adverse Effect.
There has been no Material
Adverse Effect since December 1, 2008.
5.13
Brokers.
Seller has not retained any
broker in connection with the transactions contemplated hereunder.
Buyer has no, and will have no, obligation to pay any
brokers, finders, investment bankers, financial advisors or similar
fees in connection with this Agreement or the transactions
contemplated hereby by reason of any action taken by or on behalf
of Seller.
5.14
Disclaimer
of Other Representations and Warranties.
Except as expressly set forth in this Article 5, Seller makes no
representation or warranty, express or implied, at law or in
equity, in respect of any of its assets (including the Acquired
Assets and the Assumed Liabilities), liabilities or operations,
including
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with respect to merchantability or
fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.
6.
Representations and Warranties of
Buyer.
Buyer represents and warrants
to Seller as of the date of this Agreement and as of the Closing
Date, subject to such exceptions as are specifically disclosed in
the Disclosure Schedules supplied by Buyer to Seller and dated as
of the date of this Agreement, as follows:
6.1
Corporate
Organization.
Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware and has all requisite power and authority to own its
assets and carry on its business as currently conducted by it.
Buyer is duly authorized to conduct its business and is in
good standing in each jurisdiction where such qualification is
required, except for any jurisdiction where failure to so qualify
could not reasonably be expected to materially impair or delay
Buyer’s ability to perform its obligations
hereunder.
6.2
Authority
of Buyer.
Buyer has all necessary power
and authority to enter into this Agreement and the Ancillary
Agreements to which it shall become a party and to carry out the
transactions contemplated hereby and thereby. The execution,
delivery and performance by Buyer of this Agreement and the
Ancillary Agreements to which it shall become a party have been
duly and validly authorized and no additional corporate
authorization or consent is required in connection with the
execution, delivery and performance by Buyer of this Agreement or
the Ancillary Agreements to which it shall become a party.
This Agreement and the Ancillary Agreements to which it shall
become a party have been (or will be) duly and validly executed and
delivered by Buyer and, when executed and delivered by Seller and
the QOL Members, will constitute a legal, valid and binding
obligation of Buyer enforceable against it in accordance with its
terms except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, and (b)
as limited by general principles of equity.
6.3
Consents
and Approvals.
Except as set forth on
Schedule 6.3 , no consents, waivers, approvals, Orders or
authorizations of, or registrations, declarations or filings with,
any Governmental or Regulatory Authority are required by Buyer
(“ Buyer Governmental Consents ”) in connection
with the execution and delivery by Buyer of this Agreement or the
Ancillary Agreements to which it shall become a party or the
performance of its obligations hereunder or thereunder.
6.4
Non-Contravention.
The execution and delivery by
Buyer of this Agreement and the Ancillary Agreements to which it
shall become a party does not, and the performance by it of
its
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obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and
thereby will not:
(a)
conflict with or violate any provision of
the organizational documents of Buyer; or
(b)
assuming the receipt of all Buyer
Governmental Consents, conflict with or result in a violation or
breach of any term or provision of any Law applicable to
Buyer.
6.5
Brokers.
Buyer has not retained any
broker in connection with the transactions contemplated hereunder.
Neither Seller nor any QOL Member has, and will not have, any
obligation to pay any brokers, finders, investment bankers,
financial advisors or similar fees in connection with this
Agreement or the transactions contemplated hereby by reason of any
action taken by or on behalf of Buyer.
7.
Covenants of the
Parties
7.1
Conduct
of the Business.
From the date hereof until
the Closing Date, (a) Seller shall (i) conduct its business with
respect to the Product and the Acquired Assets only in the ordinary
course, consistent with past practices and reasonable industry
standards, (ii) continue to conduct the Litigation Matter in a
diligent manner and (iii) maintain all Regulatory Documentation as
current and timely, as required by the FDA or other Governmental or
Regulatory Authority, and (b) Seller shall not without the consent
of the Buyer (which consent shall not be unreasonably withheld,
delayed or conditioned):
(i)
sell, lease, license or otherwise dispose
of the Acquired Assets except (A) pursuant to existing contracts or
commitments and (B) the sale of the inventory in the ordinary
course of business consistent with past practices;
(ii)
terminate or amend any agreement set
forth on Schedule 5.7(b)(i) or Schedule 5.7(b)(ii)
other than as contemplated by Section 7.6(c) or enter into any
agreement or arrangement that would, if in effect as of the date
hereof, otherwise be required to be set forth on such Schedule
other than purchase orders in the ordinary course of
business;
(iii)
engage in any special promotional
activities and/or special discounts with respect to the
Product;
(iv)
(A) take or agree or commit to take any
action that would make any representation and warranty made by
Seller under this Agreement on the date hereof inaccurate in any
respect at, or as of any time prior to, the Closing Date or (B)
omit or agree or commit to omit to take any action necessary to
prevent any such representation or warranty from being inaccurate
in any respect at any such time; or
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(v)
settle or agree to settle any claim,
suit, action or other proceeding relating to the Product or the
Acquired Assets or file any motions or serve or respond to any
discovery requests in the Litigation Matter; or
(vi)
agree or commit to do any of the
foregoing.
7.2
Continued
Due Diligence.
From the date hereof until
the Closing Date, Seller shall (a) give Buyer, its counsel,
financial advisors, financing sources, auditors and other
authorized representatives full access to the offices, properties,
books and records of Seller related to the Product and the Acquired
Assets, (b) furnish to Buyer, its counsel, financial advisors,
auditors and other authorized representatives such financial and
operating data and other information relating to the Product and
the Acquired Assets as such Persons may reasonably request and (c)
instruct the employees, counsel and financial advisors of Seller to
cooperate with Buyer in its investigation of the Product and the
Acquired Assets. No investigation by Buyer pursuant to this
Section 7.2 shall affect any representation or warranty given by
Seller hereunder or any of Buyer’s rights under this
Agreement.
7.3
Notices
of Certain Events; Continuing Disclosure.
(a)
Seller shall promptly notify Buyer
of:
(i)
any notice or other communication from
any Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this
Agreement or otherwise asserting or claiming any rights with
respect to the Product or the Acquired Assets;
(ii)
any notice or other communication from
any Governmental or Regulatory Authority relating to the Product or
the Acquired Assets; and
(iii)
any actions, suits, claims,
investigations or proceedings commenced or, to the Knowledge of
Seller, threatened against, or relating to or involving or
otherwise against or affecting the Product or the Acquired Assets
or that relate to the consummation of the transactions contemplated
by this Agreement.
(b)
Until the Closing Date, Seller and Buyer
shall have the continuing obligation promptly to advise the other
party with respect to any matter hereafter arising or discovered
that, if existing or known at the date of this Agreement, would
have been required to be set forth or described in a Disclosure
Schedule to this Agreement (including adding new Disclosure
Schedules to include the matters that are an exception to a
representation or warranty but for which no Schedule is currently
provided), or that constitutes a breach or prospective breach of
this Agreement; provided , that except as indicated in this
Section 7.3(b), no such supplemental disclosure will be deemed to
cure any breach as of the date of this Agreement of any
representation or warranty contained herein. If Seller
supplements its Disclosure Schedules between the date hereof and
the Closing Date pursuant to this Section 7.3(b) and such matters
so disclosed would cause the condition set forth in Section 9.2 not
to be
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met, then, notwithstanding anything
herein to the contrary, Buyer shall have the option to elect
either: (i) to terminate this Agreement in accordance with
Section 11.1; or (ii) to proceed to close the transactions
contemplated by this Agreement, in which event Seller shall have no
liability whatsoever with respect to such matters and such
disclosure shall be deemed to cure any misrepresentation or breach
of warranty that might have otherwise existed under this Agreement
by reason of the failure to have disclosed such items as of the
date hereof.
7.4
Exclusive
Dealings.
From the date hereof until
the earlier of the Closing Date and the termination of this
Agreement in accordance with its terms, Seller and each QOL Member
shall not, and shall cause Seller’s directors, officers,
employees, agents, Affiliates not to, directly or indirectly,
solicit or initiate the submission of proposals from, or solicit,
encourage, entertain or enter into any arrangement, agreement,
letter of intent or understanding with, or engage in any
negotiations with, or furnish any information to, any Person, other
than Buyer or any representative(s) or agent(s) thereof, with
respect to any encumbrance or the direct or indirect acquisition of
the Acquired Assets or any material portion thereof (including any
proposed acquisition of Seller), except in connection with the sale
of inventory in the ordinary course consistent with Seller’s
past practice. Should Seller, any QOL Member or any of their
respective Affiliates or representatives, during such period,
receive any offer or inquiry relating to any such encumbrance or
acquisition, or obtain information that such an offer is likely to
be made, Seller shall provide the Buyer with immediate written
notice thereof.
7.5
Reasonable
Best Efforts.
Each Party shall use its
Reasonable Best Efforts to take, or cause to be taken, all action,
or to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate and make effective
the transactions contemplated by this Agreement and to cause the
conditions to the obligations of the Parties to consummate the
transactions contemplated hereby to be satisfied (but not waived),
including obtaining all consents and approvals of all Persons and
Governmental or Regulatory Authorities and removing any injunctions
or other impairments or delays that are necessary, proper or
advisable to the consummation of the transactions contemplated by
this Agreement.
7.6
Cooperation
and Transition.
(a)
Subject to Section 7.10, each Party shall
cooperate with the other in preparing and filing all notices,
applications, submissions, reports and other instruments and
documents (including post-Closing new drug application supplements
or annual reports necessary for Buyer to manufacture, market,
distribute and sell the Product in the United States and South
Korea) that are necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated
by this Agreement. Without limiting the generality of the
foregoing, Seller shall use commercially reasonable efforts to
cooperate with Buyer in respect of Buyer’s efforts to obtain
any consents and approvals of any Governmental or Regulatory
Authority required for Buyer to be able to own and operate the
Acquired Assets in the United States and South Korea, including
providing data and information related to the
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Regulatory Approvals, Regulatory
Documentation and the Product upon request of any Governmental or
Regulatory Authority in the United States and South
Korea.
(b)
The Parties shall cooperate to complete
the transition of any applicable support services from Seller and
its service providers to Buyer and its service providers at or as
soon as practicable following the Closing Date.
Notwithstanding the foregoing, the Parties shall cooperate to
agree upon terms for the provision by Seller and/or its service
providers of any transition services required by Buyer until such
services have been transitioned to Buyer and its service providers,
including, if and as applicable, product supply
provisions.
(c)
Seller shall cause (i) all Restrictive
Contracts listed on Schedule 7.6(c)(i) to be terminated or
amended to remove any application or effect with respect to the
Acquired Assets at no cost to Buyer prior to the Closing Date and
(ii) all Restrictive Contracts listed on Schedule 7.6(c)(ii)
to be terminated or amended to remove any application or effect
with respect to the Acquired Assets at no cost to Buyer as soon as
reasonably practicable after the Closing Date.
(d)
Seller shall cause Ventiv Commercial
Services, LLC to cease detailing the Product as of the Closing Date
and thereafter. Upon receipt of the acknowledgement of the
filing of the renewal application for the Nascobal trademark
registered in Japan as Registration # 4190179 and issued on March
18, 1998, Seller shall cause the assignment of such trademark
by MD
RNA Inc. (formerly Nastech Pharmaceutical
Company, Inc.) to Seller to be filed with the appropriate
Governmental and Regulatory Authority in Japan.
7.7
Public
Announcements.
Buyer and Seller each agrees
that, prior and subsequent to the Closing, it and its
representatives and members shall keep the terms of this Agreement
confidential and shall not disclose such information to any other
Person (except as necessary to carry out the express terms of this
Agreement or to the extent such information becomes public
information or generally available to the public through no fault
of such Party or its Affiliates) without the prior written consent
of the other Party (which shall not be unreasonably withheld),
unless such Party reasonably believes that disclosure is required
to be made under applicable Law or the requirements of a national
securities exchange or another similar regulatory body (in which
event such Party shall, upon request of any non-disclosing Party,
exercise its Reasonable Best Efforts to obtain a protective order
or other reliable assurance that confidential treatment will be
accorded to the information so disclosed).
7.8
Bulk
Sales.
Buyer hereby waives
compliance by Seller with the provisions of any so-called
“bulk transfer law” of any jurisdiction in connection
with the sale of the Acquired Assets to Buyer. Seller will
indemnify Buyer against, and pay and reimburse Buyer for, any and
all costs, Liabilities and obligations that may be asserted by
third parties against Buyer as a result of noncompliance with any
such bulk transfer law.
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7.9
NDC
Numbers; Marketing Materials.
(a)
Buyer may use Seller’s labeling,
including Seller’s National Drug Code number (“ NDC
Number ”) for the Product existing as of the date hereof
(the “ Current NDC Number ”) and Corporate
Names, to sell or sample any lots of the Product in Inventory.
Buyer shall apply for and initiate applicable processes to
obtain and establish its own NDC Number for the Product.
(b)
Buyer shall notify Seller reasonably in
advance of the date it expects to cease sales of Product using the
Current NDC Number (the “ NDC Number Termination Date
”). Seller shall not discontinue the Current NDC Number
prior to the NDC Number Termination Date. Following the NDC
Number Termination Date, Seller shall discontinue the use of the
Current NDC Number other than with respect to Rebates, allowances
and adjustments for Product sold prior to the Closing Date;
provided , however , that Seller shall (i) not seek
from any customer any type of cross-referencing of Buyer’s
NDC Numbers with any of Seller’s products and (ii) provide
Buyer with draft notifications to any of Seller’s customers
regarding the use or discontinued use of such numbers by Seller
prior to such notifications being disseminated to the
customers.
(c)
Buyer may use any Marketing Materials
included in the Acquired Assets following Closing; provided
that Buyer uses its own name on such materials and completely
removes all Corporate Names from, or completely covers all
Corporate Names on, such materials (except as provided in Section
7.9(a) above).
7.10
Regulatory
Matters.
(a)
On the Closing Date, Seller shall
transfer the Regulatory Documentation to Buyer.
(b)
Subject to Section 7.10(a), from and
after the Closing, Buyer, at its cost, shall be solely responsible
and liable for (i) taking all actions, paying all fees and
conducting all communication with the appropriate Governmental or
Regulatory Authority required by Law in respect of the Regulatory
Approvals or the Regulatory Documentation, including preparing and
filing all reports (including adverse drug experience reports) with
the appropriate Governmental or Regulatory Authority, (ii) taking
all actions and conducting all communication with third parties in
respect of the Product (whether sold before or after Closing),
including responding to (A) complaints in respect thereof,
including complaints related to tampering or contamination, and (B)
all medical information requests, and (iii) investigating all
complaints and adverse drug experiences in respect of the Product
(whether sold before or after Closing). From the Closing Date
and for three (3) years thereafter, Buyer shall (1) provide a copy
of any annual report with respect to the Product and filed with the
FDA by Buyer and (2) provide Seller with a copy of any 15-day
reportable adverse drug experience reports that are identified with
a lot number for Product sold by Seller before the Closing Date
within two (2) Business Days after Buyer’s submission thereof
to the FDA. From and after the Closing Date, Seller shall
provide Buyer with prompt written notice (within two Business Days)
in the that event Seller becomes aware of any complaints, medical
information requests, investigations or
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adverse drug experiences in respect of
the Product and shall cooperate with Buyer in investigating and
responding thereto.
(c)
Seller shall prepare the annual report in
respect of the Product due April 1, 2009 (the “ Filing
Deadline ”) and shall use commercially reasonably efforts
to file such report prior to the Closing Date, but in all events
shall file such report no later than the Filing Deadline, and shall
provide Buyer with copies of the same; provided ,
however , that if the Closing occurs prior to the Filing
Deadline and Seller has not filed the report prior to Closing,
Seller shall provide such report to Buyer at the
Closing.
7.11
Post-Closing
Orders and Payments.
From and after 12:01 A.M.
Eastern Daylight Savings Time on the day of the Closing Date, (a)
Seller will promptly deliver to Buyer any payments received by
Seller from third parties for Product purchased by the third
parties from Buyer on or after the Closing Date, and refer all
inquiries it receives with respect to the Product, to Buyer or its
designee and (b) Buyer will promptly deliver to Seller any payments
received by Buyer from third parties for the Products purchased by
third parties from Seller or its Affiliates prior to the Closing
Date. To the extent S
